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Employers added solid164,000 positions in July

Employers added solid164,000 positions in July


Employers added solid164,000 positions in July

U.S. job growth was solid for a second straight month in July as employers added 164,000 jobs, further allaying recession worries and doing little to bolster the Federal Reserve’s case for another interest rate cut next month.

The unemployment rate was unchanged at 3.7%, just above a 50-year low, the Labor Department said Friday.

Economists expected 165,000 job gains, according to a Bloomberg survey.

Mildly disappointing: Payroll gains for May and June combined were revised down by a total 41,000. May’s additions were revised from 72,000 to 62,000, and June’s, from 224,000 to 193,000.

Goldman Sachs estimated government hiring related to the 2020 census boosted July job gains by 10,000 to 20,000.

More broadly, hiring has slowed this year to an average monthly pace of about 170,000 from 223,000 in 2018, but that’s still a solid performance. Economists largely blame the fading effects of federal tax cuts and spending increases, the sluggish global economy and President Trump’s trade war with China, which has damped business confidence and investment. Also, the low unemployment rate means employers have a harder time finding available workers.

The upshot is that consumer spending – which makes up 70% of the economy – is healthy and jobs in service industries such as health care and professional services continue to grow smartly. But manufacturing payrolls, which depend more on sales abroad, largely have been stagnant.

The Fed lowered its key interest rate this week for the first time in more than a decade because policymakers worry the global troubles, lackluster business spending and stubbornly low inflation eventually could derail the record 10-year-old economic expansion. Another cut could be on the way as soon as September if those risks combine with an escalating trade war and weakening labor market.

Trump on Thursday said he’ll slap a 10% tariff on the remaining $300 billion in Chinese imports not subject to duties. That increases the likelihood of a September rate cut, says Jim O’Sullivan of High Frequency Economics.

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Wage growth picks up

Average hourly earnings rose 8 cents to $27.98, pushing up the annual gain from 3.1% to 3.2%.

That’s a good sign. Yearly pay increases began topping 3% in the second half of 2018 but haven’t picked up further steam. That has kept inflation muted, giving the Fed another reason to reduce rates in the months ahead.

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